Utilization of FTA Networks in Asia -Lessons from ASEAN- March 21 2017 Kohei Shiino JETRO 1
Current FTA network in the world and within Asia Regional connectivity enhanced within Asia, but few FTAs between East Asia/Oceania and South Asia How are existing FTAs in ASEAN utilized, and has trade actually been created? How do Singapore-based companies utilize FTAs? Intermediary trade using back-to-back-co plays important role in maximizing benefits of FTAs. Current state of FTAs in Sri Lanka FTAs/GSPs in which Sri Lanka is involved, possible impact of TPP on exports of Sri Lanka Summary/conclusion Contents 2
Current FTA network in the world and within Asia Regional connectivity enhanced within Asia, but few FTAs between East Asia/ Oceania and South Asia
FTAs in the world and within Asia 286 FTAs in force around the world, 60 within Asia A total of 286 FTAs are currently in effect as of November 2016, out of which 60 FTAs (56 FTAs within Asia + 4 cross regional FTAs including multiple Asian countries) are in force within Asia. 4 FTAs concluded by Sri Lanka The number of effective FTAs which Sri Lanka concluded comes to 4, which include the Asia-Pacific Trade Agreement (effective since 1976), India-Sri Lanka FTA (since 2000), Pakistan-Sri Lanka FTA (since 2005) and South Asian Free Trade Area (SAFTA, since 2006). Sri Lanka is a member of BIMST-EC (The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperatio), under which member countries aims to establish free trade area. ASEAN Economic Community and ASEAN+1 FTAs play important roles in Asia The ASEAN Economic Community (AEC) and ASEAN+1 FTAs including the ASEAN-China FTA, ASEAN-Korea FTA, ASEAN-Japan FTA, ASEAN-Australia-NZ FTA and ASEAN-India FTA play important roles in enhancing and strengthening supply chains proliferated in Asia. TPP signed by 12 members including 4 from Asia The Trans Pacific Partnership (TPP) agreement was officially signed by 12 member countries in February 2016. TPP member countries include the US, Canada, Mexico, Peru, Chile, Australia, New Zealand, Singapore, Vietnam, Malaysia, Brunei and Japan across the Asia-Pacific region. 4
286 FTAs in force around the world, 60 within Asia Number of FTAs which are in force by region and year (as of end of November 2016) (Unit: Number) Asia/ Middle East/ Crossregional Americas Europe Russia/CIS Oceania Africa Total 1955-89 4 6 3 3 0 5 21 1955-59 1 1 2 60-64 1 1 1 3 65-69 0 70-74 1 1 2 4 75-79 2 1 3 80-84 2 1 3 85-89 3 1 2 6 1990-99 4 8 8 10 19 7 56 90-94 4 1 5 1 5 1 17 95-99 7 3 9 14 6 39 2000-99 29 15 10 12 4 56 126 00-04 9 7 5 8 2 18 49 05-04 20 8 5 4 2 38 77 2010-16 19 14 7 0 2 41 83 10-14 13 11 6 0 1 34 65 2015 5 1 1 0 1 3 11 2016 1 2 0 0 0 4 7 Total 56 43 28 25 25 109 286 Source: JETRO (WTO, data from each government and organization) 5
ASEAN s FTA coverage ratio reaches 60.3% FTA coverage ratios of major countries/regions (2015) (Unit: %) Australia New Zealand US Canada Mexico Chile Peru Two-way trade FTA coverage ratio Export Import FTA partner countries/regions 1st 2nd 3rd Sri Lanka exckuding APTA 19.9 8.7 25.9 SAFTA 19.9 - - - - ASEAN 60.3 56.5 64.1 ASEAN 23.6 China 17.6 Japan 8.4 Singapore 77.7 73.1 80.4 ASEAN 24.1 China 13.6 US 9.7 Malaysia 63.3 63.2 63.5 ASEAN 27.4 China 15.7 Japan 8.7 Vietnam 61.5 43.1 75.5 China 25.2 ASEAN 14.1 S. Korea 10.4 Thailand 59.5 56.0 63.2 ASEAN 23.0 China 15.6 Japan 12.3 Indonesia 64.3 60.0 68.8 ASEAN 24.8 China 15.2 Japan 10.7 India 18.3 19.9 17.2 ASEAN 10.3 S. Korea 2.6 Japan 2.2 Japan 22.7 21.1 24.2 ASEAN 15.2 Australia 3.7 Mexico 1.2 China South Korea 29.0 22.4 38.5 ASEAN 12.0 S. Korea 7.1 Taiwan 4.9 67.3 71.1 62.7 China 23.6 ASEAN 12.4 US 11.8 70.6 74.6 66.9 China 27.6 ASEAN 13.6 Japan 11.5 48.2 48.0 48.5 China 18.9 Australia 13.8 ASEAN 12.5 39.6 47.3 34.4 NAFTA 29.5 S. Korea 3.1 DR-CAFTA 1.4 70.9 79.5 63.3 NAFTA 67.8 S. Korea 1.2 EFTA 0.9 80.2 93.5 67.3 NAFTA 66.5 EU 8.0 Japan 2.6 92.1 90.6 93.8 China 24.6 US 16.0 EU 14.5 90.4 92.1 88.9 China 22.4 US 18.1 EU 13.7 Total trade 73.8 74.8 72.9 EU 63.1 Switzerland 2.7 Turkey 1.5 EU28 Extra-regional trade 28.5 31.6 25.3 Switzerland 7.2 Turkey 4.0 EEA 3.3 Note: 1) The FTA coverage ratio is the ratio of trade with FTA partner countries as a proportion of total value of trade. 2)The figures are based on effective FTAs as of June 2016 and trade values in 2015. 3) China s figures exclude those of Hong Kong (8.8%) and Macau (0.1%). 4) ASEAN s figures were based on the total trade value with each member country although some have not yet issued FTAs. 5) Figures for Canada, Singapore and New Zealand were calculated by export statistics, which exclude re-exported trade. Source: JETRO (Materials and trade statistics from each country s government, DOT, May 2016 (IMF)) 6
List of FTAs in effect within Asia FTAs Effective year FTAs Effective year Protocol on Trade Negotiations(PTA) February 1973 China-Pakistan July 2007 Asia-Pacific Trade Agreement(APTA) June 1976 Japan-Thailand November 2007 Australia-Papua New Guinea February 1977 Malaysia-Pakistan January 2008 South Pacific Regional Trade and Economic Cooperation Agreement January 1981 Japan-Indonesia July 2008 Australia-New Zealand January 1983 Japan-Brunei July 2008 Global System of Trade Preferences among Developing Countries April 1989 China-New Zealand October 2008 Laos-Thailand June 1991 Japan-Philippines December 2008 India-Nepal December 1991 ASEAN-Japan December 2008 ASEAN Free Trade Area(AFTA) January 1993 Singapore-China January 2009 Melanesian Spearhead Group (MSG) Trade Agreement January 1994 Japan-Vietnam October 2009 India-Sri Lanka March 2000 ASEAN-Australia-New Zealand January 2010 Singapore-New Zealand January 2001 ASEAN-India January 2010 Japan-Singapore November 2002 South Korea-India January 2010 Pacific Island Countries Trade Agreement(PICTA) April 2003 Malayssia-New Zealand August 2010 India-Afghanistan May 2003 China-Taiwan September 2010 Singapore-Australia July 2003 Hong Kong-New Zealand January 2011 ASEAN-China January 2004 Malaysia-India July 2011 China-Hong Kong January 2004 Japan-India August 2011 China-Macau January 2004 D8 August 2011 Thailand-India (covering only 83 items under EH) September 2004 Malaysia-Australia January 2013 Thailand-Australia January 2005 Indonesia-Pakistan September 2013 Pakistan-Sri Lanka June 2005 NZ-Taiwan December 2013 Thailand-New Zealand July 2005 Singapore-Taiwan April 2014 Singapore-India August 2005 South Korea-Australia December 2014 South Asian Free Trade Area (SAFTA) January 2006 Japan-Australia January 2015 Singapore-South Korea March 2006 South Korea-New Zealand December 2015 Trans-Pacific Strategic Economic Partnership Agreement (P4) May 2006 China-Australia December 2015 Japan-Malaysia July 2006 China-South Korea December 2015 India-Bhutan July 2006 South Korea-Vietnam December 2015 ASEAN-South Korea June 2007 Japan-Mongolia June 2016 Source:JETRO, Relevant governments 7
輸出国 輸入国 Trade matrix and existing FTAs among Asian countries Japan China Korea Thailan d Indone sia Malaysi a East Asia/Oceania Philippi nes Singap ore Brunei Daruss alam Vietna m Cambo dia Japan - 5.2 2.1 1.3 0.5 0.6 0.5 0.9 0.0 0.6 0.0 0.0 0.1 0.6 0.1 0.4 0.1 0.1 0.1 0.0 0.0 13.1 5.5 China 6.5-4.8 1.8 1.6 2.1 1.3 2.5 0.1 3.2 0.2 0.1 0.4 1.9 0.2 2.8 0.8 0.7 0.2 0.0 0.0 31.1 21.0 Korea 1.2 6.5-0.3 0.4 0.4 0.4 0.7 0.0 1.3 0.0 0.0 0.0 0.5 0.1 0.6 0.0 0.1 0.0 0.0 0.0 12.5 11.2 Laos Myanm ar Austral ia New Zealan d India Pakista n South Asia Bangla desh Sri Lanka Nepal Maldive s Export to the region /Intra regional trade (Unit:%) Export to countries with effective FTAs / Intra regional trade E a s t A s i a / O c e a n i a Thailand 0.9 1.1 0.2-0.4 0.5 0.3 0.4 0.0 0.4 0.2 0.2 0.2 0.5 0.1 0.2 0.0 0.0 0.0 0.0 0.0 5.7 5.6 Indonesia 0.9 0.7 0.4 0.3-0.4 0.2 0.6 0.0 0.1 0.0 0.0 0.0 0.2 0.0 0.6 0.1 0.1 0.0 0.0 0.0 4.5 4.4 Malaysia 0.9 1.2 0.3 0.5 0.4-0.2 1.3 0.0 0.2 0.0 0.0 0.0 0.3 0.0 0.4 0.1 0.0 0.0 0.0 0.0 6.0 5.9 Philippines 0.6 0.3 0.1 0.1 0.0 0.1-0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.5 1.5 Singapore 0.7 2.3 0.7 0.7 1.4 1.8 0.3-0.1 0.6 0.0 0.0 0.1 0.6 0.1 0.5 0.1 0.1 0.1 0.0 0.0 10.1 9.8 Brunei 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0-0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.3 Vietnam 0.7 1.0 0.4 0.2 0.1 0.2 0.1 0.2 0.0-0.1 0.0 0.0 0.2 0.0 0.1 0.0 0.0 0.0 0.0 0.0 3.3 3.3 Cambodia 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0-0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.2 Laos 0.0 0.1 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0-0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.2 Myanmar 0.0 0.2 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0-0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.5 Australia 1.4 2.9 0.6 0.2 0.2 0.2 0.1 0.2 0.0 0.1 0.0 0.0 0.0-0.3 0.4 0.0 0.0 0.0 0.0 0.0 6.6 6.2 New Zealand 0.1 0.3 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3-0.0 0.0 0.0 0.0 0.0 0.0 0.9 0.8 S o u t h A s i a India 0.2 0.5 0.2 0.1 0.1 0.2 0.1 0.4 0.0 0.3 0.0 0.0 0.0 0.2 0.0-0.1 0.3 0.3 0.2 0.0 3.1 2.5 Pakistan 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0-0.0 0.0 0.0 0.0 0.2 0.2 Bangladesh 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0-0.0 0.0 0.0 0.1 0.0 Sri Lanka 0.0-0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0-0.0 0.0 0.1 0.0 Nepal 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0-0.0 0.0 0.0 Maldives 0.0 0.0 0.0 0.0-0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0-0.0 0.0 Import from the region/ Intra regional trade 14.3 22.5 10.0 5.8 5.2 6.4 3.2 7.5 0.2 6.9 0.7 0.3 1.0 5.2 1.0 6.1 1.3 1.4 0.7 0.2 0.0 100.0 79.0 Import from countries with effective FTAs/ 6.5 16.8 7.8 5.8 5.2 6.4 3.2 7.5 0.2 6.9 0.7 0.3 1.0 5.0 0.8 3.0 1.0 0.3 0.3 0.2 0.0 79.0 Intra regional trade Note: (1) The yellow-colored shading indicates trade between countries with FTAs in effect. (2) The share represents each country's trade as a share of total intraregional trade (21countries) in 2015. 3)There are some pairts of coutnries which both bilateral FTA and regional FTAs have entered into force. 4) As for the Asia-Pacific Trade Agreement (APTA), the Protocol on Trade Negotiations (PTN) the Global System of Trade Preferences (GSTP) and D8 among developing countries, countries where this agreement has already become effective are defined as countries where FTAs have not come into effect yet. 5)SAFTA include not only India, Pakistan, Bangladesh, Sri Lanka, Nepal, Maldives but also Bhutan and Afganistan. Source: "Direction of Trade"(IMF), JETRO. 8
Tariff elimination ratios under AEC AEC eliminated almost all tariffs in ASEAN 6 Percent of tariff lines with the tariff rate of zero percent (%) Percent of tariff lines with the tariff rate less than five percent ASEAN6 99.2 99.4 Focus area of AEC Trade in goods Tariff Contents Among the 10 ASEAN states, six states (Singapore, Thailand, Indonesia, Malaysia, the Philippines and Brunei) have eliminated tariffs of almost all items within the region since 2010. CLMV (Cambodia, Laos, Myanmar and Vietnam) have also eliminated tariffs on about 90% of items since 2015. Tariffs of remaining items will be eliminated in 2018 with a few exceptions. Thailand 99.9 100.0 Indonesia 98.9 98.9 Malaysia 98.7 99.2 Philippines 98.6 99.4 Singapore 100.0 100.0 Brunei 99.3 99.3 CLMV 90.8 98.5 Vietnam 90.0 96.9 Cambodia 91.5 98.4 Laos 89.3 99.1 Myanmar 92.6 99.5 ASEAN 96.0 99.1 Source: Data from ASEAN Secretariat Services Investment Movement of persons Non-tariff In 2014, the requierments of FOB values to be stated in certificates of origin (CO) was abolished under certain conditions. Negotiations are underway to introduce a self-certification system in CO procedures in ASEAN. Regarding the ASEAN Single Window, which aims at centralization/digitization of customs clearance procedures in ASEAN states, full-fledged implementation would commence following a pilot project for mutual exchange of CO (Form D) and customs clearance documents among a portion of states. ASEAN states launced ASEAN Trade Repository (ATR) centralizing traderelated information, which help improve transparency. The ASEAN Blueprint stipulates a policy to permit ASEAN investors to invest foreign capital up to 70% in other ASEAN members. The negotiation of AFAS (ASEAN Framework Agreement on Services) package 10 are underway. Though it is still uncertain how much liberalization will be achieved for example, in some cases it might be limited to merely a promise to eventually liberalize a small portion of each service sector. The ASEAN Comprehensive Investment Agreement (ACIA), which includes investment protection (prohibition of performance requirement, expropriation/compensation, and fair and equitable treatment, etc.) and investment liberalization in the manufacturing industry, became effective in March 2012. The revised protocol was signed in August 2014. Mutual recognition agreements (MRA) for professional service qualification are being promoted. To date, ASEAN concluded MRAs in eight fields (engineering, nursing care, architectural, surveyors, accounting, medical practitioners, dental practitioners and tourism experts). Operations commenced in engineering and construction services. Source: Created based on materials of ASEAN 9
ASEAN+1 FTAs Tariff elimination ratios under ASEAN+1 FTAs ASEAN- China ASENA- Korea ASEAN- Japan ASEAN- Australia -NZ (Unit : %) ASEAN- India Singapore 100.0 100.0 100.0 100.0 100.0 Brunei 98.3 99.1 97.5 99.2 85.3 Philippines 92.5 89.6 97.1 95.1 80.9 Thailand 93.5 95.1 96.4 98.9 78.1 Tariff reduction/elimination schedule of ASEAN+1 FTAs FTA China (Unit:Millions of dollars %) Status/Tariff reductionn and elimination schedule Early harvest scheme covering agricultural and fisheries product(hs01-08) started in January 2004. Tariffs in non-agricultural and fisheries and on the remaining agricultural and fishery products began to be lowered in July 2005. China and the original ASEAN member countries have eliminated tariffs on a majority of products from 2010. CLMV eliminated tariffs on a majority of products in 2015. Malaysia 92.6 92.4 84.9 97.3 79.7 Cambodia 89.9 90.8 85.1 89.1 88.4 Vietnam 92.2 89.3 94.2 94.8 79.5 Laos 97.4 90.0 86.3 91.8 80.1 Myanmar 93.6 91.6 84.9 88.1 76.6 Indonesia 92.3 91.1 91.2 93.1 48.6 ASEAN South Korea Japan Took effect in June 2007. South Korea and the original ASEAN member countries have eliminated tariffs on a majority of products in 2010. Vietnam eliminated tariffs on a majority of products in 2016. Cambodia, Laos and Myanmar commit to eliminate tariffs on a majority of products in 2018. Took effect in December 2008. In force for all of member countries except for Indonesia. Blateral FTAs also in force between Japan and Singapore, Malaysia, Thailand, Indonesia, Brunei, the Philippines and Vietnam. China 94.7 South Korea 90.4 Japan 91.9 Australia 100.0 Australia New Zealand Took effect in Januray 2010. Australia and New Zealand have eliminated tariffs on a majority of products upon the enforcement of the agreement, while the original ASEAN member countries commit to eliminate tariffs on a majority of products from 2013. NZ 100.0 India 78.8 Average 94.3 92.7 92.6 95.6 79.6 Source: Fukunaga, Kuno"Toward a Consolidated Preferential Tariff Structure in East Asia: Going beyond ASEAN+1 FTAs", ERIA Policy Brief 2012-03 India Source: Relevant agreements. Took effect in 2010. India and the original ASEAN member countries excluding the Philippines eliminated tariffs on normal track 1 in the end of 2013 and eliminated tariffs on normal track 2 in the end of 2016. India and Philippines commit to eliminate tariffs on normal track 1 in the end of 2018 and rliminate tariffs on normal track 2 in the end of 2019. 10
Ongoing RCEP negotiations What is RCEP? RCEP (the Regional Comprehensive Economic Partnership) is a framework with participation by a total of 16 countries. The official negotiations started at the ASEAN Summit in November 2012. Countries participating in negotiations The following 16 countries are participating in RCEP negotiations: Thailand, Indonesia, Malaysia, the Philippines, Vietnam, Cambodia, Myanmar, Laos, Singapore, Brunei, Japan, China, Korea, India, Australia and New Zealand. Guiding principles and objectives for negotiations in RCEP 1) Consistency with WTO 2) Broader and deeper engagement with significant improvements over the ASEAN+1 FTAs. 3) Facilitation of trade and investment and enhancement of transparency in trade and investment. 4) Flexibility, including provision for special and differential treatment for LDCs. 5) The ASEAN+1 FTAs and the bilateral/plurilateral FTAs will continue to exist. 6) Open accession clause to enable the participation of any ASEAN FTA. 7) Technical assistance and capacity building. 8) Parallel negotiations on trade in goods, trade in services, investment and other areas. Coverage of negotiations 1) Trade in goods 2) Trade in services 3) Investment 4) Economic and technical cooperation 5) Intellectual property 6) Competition 7) Dispute settlement 8) Other issues 11
How are existing FTAs in ASEAN utilized, and has trade actually been created? 12
Utilization of existing FTAs in effect Trends in FTA/EPA utilization by Japaneseaffiliated firms in ASEAN Proportions of firms utilizing FTAs/EPAs (total, by company size and industry) Proportions of firms utilizing FTAs/EPAs in 2015 and 2016 (by export/import) <For Export> <For import> Proportions of firms utilizing FTAs/EPAs (by country/region) A total of 47.5% of firms engaged in trade are using FTAs/EPAs, up 3% from the 2015 survey. Large enterprises (49.0%) are more likely to be using FTAs/EPAs than SMEs (45.0%). By industry, the textile and chemical/ pharmaceutical industries use FTAs/EPAs more than other industries. By country/region, FTA/EPA use by Japanese-affiliated firms is the highest in South Korea at 67.1%, followed by Indonesia, New Zealand, Thailand, India, and Australia at over 50%, respectively. FTA/EPA use increased from the 2015 survey both in imports and exports. FTA/EPA use by Japanese-affiliated firms in ASEAN increased by about 2% from the 2015 survey both in imports and exports. Source: Survey of Japanese-Affiliated Firms in Asia and Oceania (FY2014 Survey),JETRO 13
Major ASEAN countries enjoying trade creation effect Gravity model to examine trade creation effects ln (EXti) =β0+β1ln(distance i )+β2ln(gdp t i)+β3ln (GDPperCapita ti )+β4 FTAdummy ti +є Dependent variable: Volume of exports of relevant countries in the period of 1990-2014 Results of gravity model estimation Thailand Singapore (Domestic Export) Malaysia Indonesia Fixed Random Fixed Random Fixed Random Fixed Random Distance - -1.523*** (-10.95) - -1.162*** (-4.65) - -1.307*** (-7.37) - -1.450*** (-7.07) GDP 2.176*** (12.08) 1.050*** (15.23) 1.126*** (4.86) 0.653*** (6.56) 2.074*** (11.08) 1.067*** (12.61) 1.271*** (8.40) 1.026*** (12.04) GDP per capita -0.429* (-2.34) 0.194** (2.83) -0.464* (-2.11) -0.00571 (-0.05) -0.644*** (-3.44) 0.0168 (0.18) 0.0055 (0.04) 0.0345 (0.39) FTA dummy 0.352*** (4.50) 0.427*** (5.52) 0.183** (2.91) 0.193** (3.13) 0.189* (2.35) 0.223** (2.80) 0.170* (2.38) 0.202** (2.90) Year dummuy Yes Yes Yes Yes Yes Yes Yes Yes R 2 (within) 0.6791 0.6663 0.4203 0.4163 0.5693 0.558 0.6741 0.6726 n 1175 768 1175 1125 14
Components: Expanding supply chain to Cambodia and Laos Expanding supply chain to Cambodia and Laos Labor market conditions in Thailand have led to expansion in supply chains to neighboring countries. Some Japanese companies established factories in Cambodia and Laos, manufacturing labor-intensive products which are to be supplied to their mother factories in Bangkok. The AEC, together with the improvement in connectivity in Mekong area including the Southern and the West Economic Corridors, contribute to expanding supply chains. Expanding supply chains between Thailand, Cambodia and Laos Thai import in wire harnesses (Unit:%) 2010 2013 2014 2015 2016 Import Value 77 247 261 361 365 Import from Cambodia 0 36 57 74 87 Savanaket share (%) 0.0 14.6 22.0 20.4 23.7 Source: Trade statistics of Thailand Bangkok Poipet Koh Kong Phnom Penh Map:CIA 15
Changing comparative wage structures in Asian cities Wages by major cities in Asia (2005) Wages by major cities in Asia (2015) (Unit:US$ %) Worker Managers Worker Wage(Monthly) Index Wage(Monthly) Index Guangzhou 146 100.0 622 100.0 Dhaka 45 31.1 420 67.5 Colombo incl. surronding EPZ 85 57.9 418 67.3 Vientiane - - - - Hanoi 122 83.2 556 89.5 Ho Chi Minh 148 101.4 813 130.8 Phnom penh - - - - Jakarta 131 89.7 618 99.4 Karachi 173 118.5 907 145.9 Chennai - - - - Bangkok 146 100.0 584 94.0 Manila 182 124.7 649 104.4 New Delhi 172 117.8 978 157.4 Kuala Lumpur 205 140.4 1,643 264.4 Singapore 530 362.7 2,993 481.5 Source :The 17th Comparative Survey of Investment-Related Costs in 31 Major Cities and Regions in Asia and Oceania Wage (Monthly) Index Wage (Monthly) Index Guangzhou 561 100.0 1,581 100.0 Dhaka 100 17.8 658 41.6 Yangon 127 22.6 951 60.2 Phnom penh 162 28.9 664 42.0 Vientiane 179 31.9 1,005 63.6 Colombo incl. surronding EPZ Managers 143 25.5 759 48.0 Hanoi 181 32.3 871 55.1 Karachi 185 33.0 1,145 72.4 Ho Chi Minh 193 34.4 736 46.6 Bengaluru 163 29.1 1,070 67.7 Chennai 214 38.1 1,080 68.3 Jakarta 257 45.8 912 57.7 Manila 317 56.5 1,023 64.7 Bangkok 348 62.0 1,401 88.6 New Delhi 245 43.7 1,659 104.9 Kuala Lumpur 317 56.5 1,445 91.4 Singapore 1,608 286.6 5,337 337.6 Source : The 26th Comparative Survey of Investment-Related Costs in 31 Major Cities and Regions in Asia and Oceania 16
How do Singapore companies utilize FTAs? Intermediary trade using back-to-back CO plays important role to maximize benefits of FTAs 17
Current state of FTAs in Singapore Export (Unit:US$ Million, %) Country/Region Value Share Status of FTAs Country/Region Value Share Status of FTAs 1 China 47,709 13.8 ASEAN-China, China-Singapore 1 China 42,112 14.2 ASEAN-China, China-Singapore 2 Hong Kong 39,666 11.4 2 EU28 37,756 12.7 EU-Singapore(not effective) 3 Malaysia 37,770 10.9 AEC 3 United States 33,198 11.2 U.S.-Singapore 4 Indonesia 28,367 8.2 AEC 4 Malaysia 33,062 11.1 AEC 5 EU28 28,138 8.1 EU-Singapore(not effective) 5 Taiwan 24,673 8.3 Taiwan-Singapore 6 United States 21,708 6.3 U.S.-Singapore 6 GCC 22,916 7.7 Singapore-GCC 7 Japan 15,219 4.4 Japan-Singapore, ASEAN-Japan 7 Japan 18,593 6.3 Japan-Singapore, ASEAN-Japan 8 Korea South 14,499 4.2 Korea-Singapore,ASEAN-Korea 8 Korea South 18,192 6.1 Korea-Singapore,ASEAN-Korea 9 Taiwan 14,446 4.2 Taiwan-Singapore 9 Indonesia 14,379 4.8 AEC 10 Thailand 13,764 4.0 AEC 10 Thailand 7,784 2.6 AEC 11 Vietnam 12,127 3.5 AEC 11 India 5,784 1.9 India-Singapore,ASEAN-India 12 Australia 11,486 3.3 Australia-Singapore,ASEAN-Australia-NZ 12 Russia 5,175 1.7 13 India 10,619 3.1 India-Singapore,ASEAN-India 13 EFTA 5,162 1.7 Singapore-EFTA 14 GCC 6,828 2.0 Singapore-GCC 14 Philippines 4,532 1.5 AEC 15 Philippines 6,411 1.8 AEC 15 Vietnam 3,603 1.2 AEC 16 Panama 5,448 1.6 Singapore-Panama 16 Australia 3,218 1.1 Australia-Singapore,ASEAN-Australia-NZ - EFTA 2,059 0.6 Singapore-EFTA - NZ 720 0.2 - NZ 1,731 0.5 NZ-Singapore,ASEAN-Australia-NZ, TPP(P4) - Chile 86 0.0 TPP(P4) NZ-Singapore,ASEAN-Australia-NZ, TPP(P4) - Jordan 86 0.0 Singapore-Jordan - Costa Rica 72 0.0 Singapore-Panama - Chile 58 0.0 TPP(P4) - Peru 16 0.0 Singapore-Peru - Peru 55 0.0 Singapore-Peru - Jordan 14 0.0 Singapore-Jordan - Costa Rica 28 0.0 Singapore-Costa Rica - Panama 8 0.0 Singapore-Costa Rica - ASEAN 102,685 29.6 AEC - ASEAN 63,791 21.5 AEC World 346,701 100.0 World 296,799 100.0 FTA coverage ratio 254,607 73.4 FTA coverage ratio 80.3 Note: 1)The FTA coverage ratio is the ratio of trade with counrties/regions with which FTAs are in force as a proportion of total value of trade. 2) GCC includes Saudi Arabia, U.A.E., Kuwait, Bahrain, Oman and Watar. 3) EFTA includes Switzerland, Norway, Iceland and Liechtenstein. Source: Trade statistics of Singapore, relevant governments Import 18
Re-exports occupy about 50% of Singapore exports What are re-exports? Re-exports are exports of foreign-origin goods which are first imported into intermediate countries (e.g. Singapore) for transshipment or breaking bulk in stock for onward shipment to other destinations. Re-exports occupy about 50% of Singapore exports The value of re-exports of Singapore in 2015 was US$ 171 billion, occupying 52% of the total exports. Singapore works as logistics hub in the Asian region. Trade flow of Singapore (2016) Trend of re-exports in Singapore (%) (US$ billion) 60.0 450 Singapore imports US$ 283 billion Re-exports US$ 171 billion (51.9%) 55.0 50.0 45.0 400 350 300 250 200 Singapore Exports 40.0 150 US$ 330 billion 35.0 100 50 Domestic exports US$ 159 billion (48.1%) 30.0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total value of Export Re-export Domestic (Year) Source: Trade statistics of Singapore 19
Intermediary trade using back-to-back certificates of origin Intermediary trade using back-to-back certificates of origin Intermediary trade (stock operation) is a mode of transaction in which goods manufactured in exporting member countries are held in stock for a period at warehouses in intermediate countries, with part of the stock is re-exported to final importing member countries. A back-to-back certificate of origin is a second certificate of origin issued by authorities of intermediate countries, based on the first original certificate of origin issued by the first exporting country. In most FTAs which have adopted third-party-certification systems in Asia, back-to-back certificates of origin are issued when exporting countries, intermediate counties and final importing countries are members of the same FTA. Stock operation and direct consignment rule Forwarding part of a stock of goods imported from the first exporting member country is likely to violate the direct consignment clause of FTAs, making the first certificate of origin invalid. Hence, in order to apply preferential tariffs at the importing member countries under the same FTA, it is required that exporters acquire a second certificate of origin from the authorities in the intermediate country, based on the first original certificate of origin issued by the first exporting member country. Why firms conduct intermediary trade (stock operation)? The objective of stock operation in general is to reduce lead time to customers from manufactures/exporters. By keeping inventories at the most convenient place, instead of countries in which products are manufactured, goods can reach customers in the shortest possible period of time. 20
Example: Stock operation using ASEAN-India FTA Illustration using ASEAN-India FTA 100 units of a product exported by Company A in the first exporting member country (Thailand) are kept in stock at bonded warehouses in an intermediate member country (Singapore), with final purchases yet to be fixed. At this stage, the first certificate of origin issued by the relevant authority in Thailand is sent to Company B in Singapore by Company A. Company C in the final importing member country (India) places an order for 30 pieces of the product to Company B, and Company B re-exports them to India with a second certificate of origin issued by the authority of Singapore. Example of stock operation using ASEAN-India FTA Thailand Company A Export 100 pieces First Invoice CO (Form AI) Singapore Company B 30 units exported out of 100 Both commercial flow and transportation of goods via third countries India Company C Goods Second invoice Back-to-back certificate of origin Articles related to back-to-back certificate of origin under ASEAN-India FTA Article 11, Operational Certification Procedures for the rules of origin for AIFTA (a) Notwithstanding paragraph (b) of Article 7, Articles 13 and 14 (b), the Issuing Authority of the intermediate Party may issue a back-to-back AIFTA Certificate of Origin if an application is made by the exporter of that Party while the product is passing through that Party s territory, provided that: (i) - (viii) 21
Current state of FTAs in Sri Lanka FTAs/GSPs in which Sri Lanka is involved, Possible impact of TPP on exports of Sri Lanka
Current state of FTAs/GSPs in Sri Lanka FTA coverage ratio of Sri Lanka (2015) (Unit:US$ Million, %) Export Import Country/Region Value Share Status of FTAs Country/Region Value Share Status of FTAs 1 EU28 3,022 29.6 EU GSP 1 India 4,284 22.5 India-Sri Lanka FTA, SAFTA 2 United States 2,802 27.4 US GSP 2 China 3,725 19.6 3 India 645 6.3 India-Sri Lanka FTA, SAFTA 3 EU28 1,806 9.5 4 China 296 2.9 4 Japan 1,392 7.3 5 UAE 274 2.7 5 UAE 1,076 5.7 6 Japan 214 2.1 Japan GSP 6 Singapore 922 4.9 7 Russia 194 1.9 7 Malaysia 511 2.7 8 Turkey 181 1.8 8 Thailand 498 2.6 9 Canada 180 1.8 Canada GSP 9 United States 471 2.5 10 Australia 159 1.6 Australia GSP 10 Taiwan 460 2.4 11 Iran 155 1.5 11 Indonesia 435 2.3 12 Hong Kong 118 1.2 12 Hong Kong 380 2.0 13 Israel 107 1.1 13 Korea South 308 1.6 14 Mexico 106 1.0 14 Pakistan 297 1.6 SAFTA 15 Iraq 105 1.0 15 Canada 293 1.5 - Bangladesh 93 0.9 SAFTA 16 Australia 270 1.4 - Maldives 77 0.8 SAFTA - Pakistan 297 1.6 Pakistan-Sri Lanka FTA, SAFTA - Pakistan 73 0.7 Pakistan-Sri Lanka FTA, SAFTA - Bangladesh 38 0.2 SAFTA - Nepal 4 0.0 SAFTA - Nepal 0 0.0 SAFTA - Bhutan 0 0.0 SAFTA - Afghanistan 0 0.0 SAFTA - Afghanistan 0 0.0 SAFTA - Bhutan 0 0.0 SAFTA - ASEAN 279 2.7 - ASEAN 2,661 14.0 World 10,225 100.0 World 18,999 100.0 FTA coverage ratio 892 8.7 FTA coverage ratio 4,916 25.9 Note: 1)The FTA coverage ratio is the ratio of trade with counrties/regions with which FTAs are in force as a proportion of total value of trade. 2)SAFTA includes India, Pakistan, Bangladesh, Sri Lanka, Nepal Bhutan, Maldive and Afganistan. 3) As for APTA, countries where this agreement has already become effective are defined as countries where FTAs have not come into effect yet. Source: Trade statistics of Sri Lanka, relevant governments, UNCTAD 23
Overview of Japanese, EU and US GSPs Japan GSP GSP beneficiaries: 97 countries/regions (excluding those for GSP-LDC) GSP items: About 3,600 items Tariff exemption, reduction GSP -LDC GSP-LDC beneficiaries: 47 countries GSP-LDC items: About 6,000 items (About 98% of total items are duty-free, including non-taxable items on an MFN) Tariff exemption EU 1. Former GSP GSP beneficiaries: 176 countries General GSP, GSP Plus, EBA (Everything But Arms) 2. New GSP (implemented in January 2014) Standard GSP GSP beneficiaries: 30 countries (excluding those for GSP Plus and EBA) Standard GSP items: About 66% of total items Tariff exemption, reduction GSP Plus GSP Plus beneficiaries: 13 countries (excluding those for General GSP and EBA) Further preference is given to countries meeting certain requirements (including compliance with human rights and environmental treaties, diversity standards, and import share standards) GSP Plus items: About 66% of total Tariff exemption EBA (Everything But Arms) EBA beneficiaries: 49 countries EBA items: All items other than arms Tariff exemption U.S. GSP GSP beneficiaries: 79 countries (excluding those for GSP-LDC) GSP items: About 3,500 items (on an HS 8-digit basis) Tariff exemption GSP -LDC GSP-LDC beneficiaries: 43 countries GSP-LDC items: About 5,000 items (on an HS 8-digit basis) Tariff exemption Most textile products, garments, footwear are not subject to GSP 24
Which Asian counties enjoy GSP benefits? Asian countries benefiting from GSPs with Japan, EU and US U.S. Japan EU Cambodia (LDC) (LDC) (EBA) Suspended in 2013 Bangladesh (LDC) (LDC) (EBA) Reinstated in November 2016 Reinstated in July 2013 Myanmar (LDC) (LDC) (EBA) Laos not granted (LDC) (EBA) Pakistan (standard) (standard) (GSP+) India FTA in effect, some items eligible to GSP (standard) (Standard) Vietnam not granted FTA in effect, some items eligible to GSP (Standard) Sri Lanka (standard) (standard) (Standard) Philippines FTA in effect, some items eligible to GSP (standard) (GSP+) Indonesia FTA in effect, some items eligible to GSP (standard) (Standard) not granted Thailand FTA in effect, some items eligible to GSP (standard) (graduated in 2015) not granted China not granted (standard) (graduated in 2015) not granted Malaysia not granted FTA in effect, some items eligible to GSP (graduated in 2014) not granted Brunei not granted not granted (graduated in 2014) Note: means that GSP is granted. GSP+ in EU is the scheme to provide additional preferential market access provided that beneficiaries of standard GSP meet criteria in terms of ratifying and implementing international conventions relating to human/labor rights and environment etc. Source: The governments of Japan, EU and the U.S. 25
Export Structure of Sri Lanka HS code Total Export Value Share (Unit:MillionUS$, %) Garments 61-63 4,620 45.2 20.8 18.9 0.4 0.3 0.5 0.3 U.S. EU28 Japan ASEAN China India Food 1-11, 16-24 2,504 24.5 1.5 3.6 0.7 0.8 0.4 2.8 Chemicals 28-40 1,011 9.9 3.1 3.2 0.2 0.4 0.1 0.4 Electrical equipment 85 212 2.1 0.1 0.3 0.1 0.1 0.1 0.4 Textiles Transport equipment Footwear 50-60 317 3.1 0.2 0.6 0.1 0.1 0.2 0.3 86-89 244 2.4 0.0 0.3 0.0 0.0 1.2 0.7 64 86 0.8 0.0 0.1 0.0 0.4 0.2 0.0 General machinery 84 82 0.8 0.3 0.3 0.0 0.0 0.0 0.0 Total Export 10,225 100.0 27.4 29.6 2.1 2.7 2.9 6.3 Note: Each share is as p proportion to total export. Source: Trade statistics of Sri Lanka 26
Overview of TPP What is the TPP? The Trans-Pacific Partnership (TPP) is an economic partnership agreement involving 12 Asia-Pacific countries. Negotiations on the TPP Agreement started in 2010, produced a broad agreement in October 2015 and was signed on February 4, 2016. TPP negotiation participants (12 countries) Singapore, Brunei, New Zealand, Chile, US, Australia, Peru, Vietnam, Malaysia, Mexico, Canada, Japan, Chronicle of TPP negotiations May 2006: The Trans-Pacific Strategic Economic Partnership Agreement (P4) between Singapore, New Zealand, Chile and Brunei takes effect. March 2010: The United States, Australia, Peru and Vietnam join the P4 participants to launch eight-nation TPP negotiations. October 2010: Malaysia joins the TPP negotiations. November 2011: Agreements are made on a TPP outline. December 2012: Canada and Mexico join the TPP negotiations. July 2013: Japan joins the TPP negotiations. June 2015: The U.S. Trade Promotion Authority Act is enacted. October 2015: A broad agreement is reached. February 2016: An agreement is signed Chapters Chapter 1 Initial Provisions & General Definitions Chapter 2 National Treatment and Market Access for Goods Chapter 3 Rules of Origin and Origin Procedures Chapter 4 Textiles & Apparel Chapter 5 Customs Administration & Trade Facilitation Chapter 6 Trade Remedies Chapter 7 Sanitary & Phytosanitary (SPS) Measures Chapter 8 Technical Barriers to Trade (TBT) Chapter 9 Investment Chapter 10 Cross-Border Trade in Services Chapter 11 Financial Services Chapter 12 Temporary Entry for Business Persons Chapter 13 Telecommunications Chapter 14 Electronic Commerce Chapter 15 Government Procurement Chapter 16 Competition Policy Chapter 17 State-Owned Enterprises and Designated Monopolies Chapter 18 Intellectual Property Chapter 18 Labor Chapter 20 Environment Chapter 21 Cooperating & Capacity Building Chapter 22 Competition & Business Facilitation Chapter 23 Development Chapter 24 Small & Medium-Sized Businesses Chapter 25 Regulatory Coherence Chapter 26 Transparency & Anti-corruption Chapter 27 Administrative & Institutional Provisions Chapter 28 Dispute Settlement Chapter 29 Exceptions and Genera Provisions Chapter 30 Final Provisions 27
Trade matrix and existing FTAs among TPP member countries Existing FTAs among TPP members Asian and between TPP members and non-tpp members (Unit: %) U.S. Canada Mexico Peru Ratio of export toward TPP member countries (value of export to each country/total export value) Chile Australia New Zealand Singapore Malaysia Vietnam Brunei Japan Total for TPP Total for new FTA or no FTA Total export value (Unit: MillionUS$) U.S. 18.7 15.7 0.6 1.0 1.7 0.2 1.9 0.8 0.5 0.0 4.2 45.2 5.7 1,502,572 Canada 76.8 1.3 0.2 0.2 0.4 0.1 0.3 0.2 0.1 0.0 1.9 81.2 2.9 410,081 Mexico 81.1 2.8 0.4 0.5 0.3 0.0 0.1 0.0 0.0 0.0 0.8 86.1 0.5 380,789 Peru 15.1 7.0 1.6 3.2 0.3 0.1 0.0 0.1 0.2 0.0 3.3 31.0 0.7 33,536 TPP members Chile 13.4 2.1 2.1 2.5 0.8 0.1 0.1 0.1 0.4 0.0 8.9 30.5 0.0 62,042 Australia 5.4 0.6 0.2 0.0 0.1 3.3 2.7 1.8 1.4 0.0 15.9 31.6 0.9 187,687 New Zealand 11.8 1.4 0.7 0.3 0.3 16.9 2.2 1.9 1.1 0.0 6.0 42.6 20.2 34,359 Singapore(Domestic) 7.1 0.2 0.5 0.0 0.0 3.6 0.6 11.2 3.1 0.2 4.3 30.9 0.7 169,996 Malaysia 9.4 0.4 0.8 0.0 0.1 3.6 0.5 13.9 2.2 0.3 9.5 40.9 10.7 199,959 Vietnam 20.7 1.5 1.0 0.1 0.4 1.8 0.2 2.0 2.2 0.0 8.7 38.6 23.2 162,017 Brunei 0.8 0.0 0.0 0.0 0.0 3.5 5.2 3.5 4.6 0.7 36.3 54.8 0.8 6,353 Japan 20.1 1.2 1.7 0.1 0.3 2.1 0.3 3.2 1.9 2.0 0.0 33.0 21.7 624,889 China 18.0 1.3 1.5 0.3 0.6 1.8 0.2 2.3 1.9 2.9 0.1 6.0 36.8 26.7 2,280,541 South Korea 13.3 0.9 2.1 0.2 0.3 2.1 0.2 2.8 1.5 5.3 0.1 4.9 33.6 6.9 526,757 Thailand 11.2 0.6 1.3 0.2 0.3 4.6 0.6 4.1 4.8 4.2 0.0 9.4 41.2 13.1 210,865 Indonesia 10.8 0.5 0.5 0.1 0.1 2.5 0.3 8.4 5.1 1.8 0.1 12.0 42.2 12.0 150,393 TPP-non-members Philippines 15.0 1.0 0.8 0.1 0.1 0.8 0.1 6.2 2.0 1.2 0.0 21.1 48.3 16.9 58,648 Cambodia 25.0 6.5 0.7 0.1 0.2 1.0 0.1 0.7 1.6 2.2 0.0 6.7 44.7 32.5 8,542 Laos 0.9 0.4 0.0 0.0 0.0 0.1 0.1 0.3 0.1 17.6 0.0 2.0 21.4 1.4 4,374 Myanmar 1.0 0.2 0.0 0.0 0.0 0.3 0.0 0.9 1.3 1.0 0.0 6.2 10.9 1.2 12,652 India 15.0 0.8 1.0 0.3 0.2 1.2 0.1 2.9 1.8 2.0 0.0 1.8 27.2 18.4 267,930 Bangladesh 13.9 2.6 0.4 0.0 0.1 1.8 0.2 0.4 0.4 0.2 0.0 2.1 22.0 22.0 29,925 Pakistan 16.6 1.0 0.5 0.1 0.3 0.8 0.2 0.9 0.8 1.3 0.0 0.8 23.2 22.4 22,089 Sri Lanka 27.4 1.8 1.0 0.2 0.4 1.6 0.2 0.8 0.3 0.7 0.0 2.1 36.5 36.5 10,225 Notes: 1) Cells in light (yellow) color indicate countries which bilateral or regional FTAs have already entered into force. 2) Cells in orange color indicate countries which TPP will be the first FTA. 3) Cells in green color indicate countries which FTAs have not concluded. 4) The figures are based on statistics in 2015. 5) Singapore (domestic) means exports excluding re-exports. 6) Statistics of Laos, Myanmar and Bangladesh are based on DOT. Others were based on trade statistics of respective countries. 7) As for the Global System of Trade Preferences (GSTP) among developing countries, countries where this agreement has already become effective are defined as countries where FTAs have not come into effect yet. Source: JETRO, Trade statistics of respective countries, "DOT August 2016" (IMF) 28
Higher duties on textiles/garments and transport equipment Simple average applied tariff rates in TPP-members and Asian non-members (Unit: %) U.S. Canada Mexico Peru Chile Australia TPP-members New Zealand Singapore Malaysia Vietnam Brunei Japan Sri Lanka Food 1-11,16-24 14.0 3.8 19.0 2.6 6.0 1.1 1.7 0.0 2.6 20.1 0.0 8.2 23.1 Ore 26 0.1 0.0 0.0 0.0 6.0 0.0 0.0 3.5 0.0 3.5 0.0 0.0 0.0 Mineral fuels etc. 27 0.5 0.7 0.1 0.0 6.0 0.3 0.2 3.5 0.4 2.9 0.0 0.8 2.8 Coal 2701 0.0 0.0 0.0 0.0 6.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 Natural gas 2711 0.0 1.8 0.0 0.0 6.0 0.0 0.0 0.0 0.0 3.6 0.0 1.5 0.0 Petroleum products 2708-10, 2712-13, 2715 1.1 0.6 0.2 0.0 6.0 0.8 0.6 0.0 1.3 3.4 0.0 0.7 7.0 Chemicals 28-40 2.2 2.3 4.0 2.2 6.0 2.4 1.4 0.0 5.8 6.0 1.5 1.9 7.3 Chemical products 28-38 2.1 2.4 4.0 2.4 6.0 2.1 1.2 0.0 4.1 5.7 1.4 1.9 6.5 Plastic, rubber 39-40 2.9 1.4 4.0 1.5 6.0 4.5 2.6 0.0 15.0 8.1 1.8 1.9 11.4 Textiles, Garments 50-63 6.8 4.6 10.8 5.7 6.0 3.6 3.2 0.0 6.5 10.7 0.9 5.6 5.1 Textiles 50-60 6.0 1.5 8.4 4.3 6.0 3.4 2.0 0.0 7.7 8.6 0.9 5.0 2.4 Garments 61-63 9.9 16.2 19.4 10.8 6.0 4.4 7.7 0.0 2.1 18.3 1.2 7.9 14.8 Footwear 64 10.5 12.1 12.8 11.0 6.0 3.6 5.9 0.0 1.6 27.3 4.9 16.4 6.9 Steel 72-73 0.8 0.7 1.6 1.0 6.0 4.2 2.7 0.0 9.2 7.3 0.1 0.4 10.3 General machinery 84 1.2 0.3 2.7 0.4 6.0 2.8 3.0 0.0 3.3 3.1 2.7 0.0 1.7 Electrical equipment 85 1.6 1.2 3.5 1.3 6.0 2.7 2.6 0.0 4.1 7.9 5.0 0.1 6.8 Transport equipment 86-89 2.3 6.7 6.4 0.6 5.0 2.7 2.5 0.0 6.0 8.3 1.0 0.0 3.9 Automobiles 8702-05 6.1 5.3 22.2 1.5 5.7 5.0 4.4 0.0 22.9 34.0 0.0 0.0 1.8 Automobile parts 8707-08 840731-34 1.8 0.5 3.9 0.0 0.9 0.9 0.0 0.0 6.0 6.0 Precision equipment 90-91 2.6 2.0 1.2 1.8 6.0 0.6 0.7 0.0 0.7 10.3 3.6 0.2 7.9 Notes: 1) The average applied tariff rates of Thailand, Cambodia, Laos and Pakistan are based on statistics in 2014. Malaysia, Myanmar and Bangladesh are based on statistics in 2013. The rest of countries are based on statistics in 2015. 2) Cells are highlighted if average applied tariff rates of TPP members are more than 5%. Source: World Tariff Online 4.3 1.5 5.6 2.5 0.0 0.0 18.3 13.1 19.8 33.9 9.2 20.0 0.0 0.0 11.7 15.0 29
Summary & conclusions FTAs have proliferated within Asia, but few FTAs exist between South Asia and East Asia. FTAs have proliferated throughout the world as well as within Asia. FTAs cover most pairs of countries in East Asia/Oceania as well as in South Asia. However, most pairs of countries are not covered by any FTA between East Asia and South Asia. FTAs are widely utilized, playing important roles in enhancing supply chains. About half of firms engaged in trade in Asia are using FTAs, and existing FTAs in major ASEAN countries brought a positive impact on exports of those ASEAN countries. FTAs play important roles in enhancing and strengthening supply chains in Asia. Intermediary trade using a back-to-back CO has expanded re-exports of Singapore. As Singapore is party to most regional FTAs in effect in Asia, Singapore-based firms can use FTAs even when they re-export a portion of goods in stock which were previously imported, using a backto-back CO issued by the authority of Singapore. Negative impacts of the TPP are likely to be larger in sectors not covered by the US GSP. If the Trans Pacific Partnership (TPP) agreement comes into effect, a negative impact is likely to be larger on exports of TPP-non-members to the US in garments and footwear, because the US GSP scheme does not cover most of those sectors. 30
Thank you for your kind attention Utilization of FTA network in Asia -Lessons from ASEAN- Kohei Shiino International Economy Division, Overseas Research Department JETRO(Japan External Trade Organizaiton) 31